Executive Summary
Innovation is highly important to the competitiveness and productivity levels of advanced capitalist economies. It has long been recognized that innovation is a key motor of economic change, as it stimulates intense forms of competition. New products command a premium price, and as others seek to replicate those innovations to improve their own products, those innovations diffuse widely into the economy, increasing general well-being. Innovation is partly about new products, but more importantly, innovation concerns building capacity to make profitable changes more effectively, encompassing changes in production technologies and techniques as well as new product introduction. More recently, this link between innovation capacity and competitiveness has been made explicit: there has been a realization that long term business competitiveness requires effective innovators as well as innovations.
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